360's revenue fell by about 6.6% in the first half of the year: continue to lose money, 360 Wisdom Brain is temporarily one step behind?

On August 30, 360 Security Technology Co., Ltd. (SH:601360, hereinafter referred to as "360") released its 2023 semi-annual report for the year ended June 30. According to the financial report, 360's revenue in the first half of 2023 was 4.503 billion yuan, down 6.64% from 4.824 billion yuan in the same period of 2022.

In the first half of 2023, 360's net loss was 231 million yuan, compared with a net loss of 398 million yuan in the same period of 2022, a net loss of 255 million yuan after deduction, and a net loss of 505 million yuan in the same period of 2022. It is not difficult to see that 360's performance in the first half of 2023 was less than expected.

According to Bedo Finance, 360's previously released performance forecast data shows that 360 is expected to achieve revenue of 4.57 billion yuan in the first half of 2023, down 5.19% from the same period in 2022. At the same time, it is expected that the net loss attributable to the parent in the first half of 2023 will be 230 million yuan, and the net loss after deduction is expected to be 250 million yuan.

Over a long period of time, the decline in 360's performance has narrowed. In contrast, 360's operating income in the first half of 2022 fell by 14.16% year-on-year, and the decline in half-year revenue narrowed. In the second quarter of 2023, 360's revenue was about 2.537 billion yuan, a year-on-year increase of 10.42%, and a year-on-year change of -9.02% in the same period of 2022.

For the decline in revenue, 360 attributed it to "the Internet advertising and service business was affected by the decline in the industry and continued the downward trend". As for the loss, 360 did not explain it. In the first quarter of 2023, 360's net loss was 186 million yuan, and in the second quarter of 2023, it was a net loss of 45 million yuan.

According to previous financial report data, 360's revenue in 2016, 2017, 2018 and 2019 was 9.904 billion yuan, 12.238 billion yuan, 13.129 billion yuan and 12.841 billion yuan, respectively, and 11.615 billion yuan, 10.886 billion yuan and 9.521 billion yuan in 2020, 2021 and 2022, respectively.

In contrast, 360's revenue peaked in 2018 and began to decline in 2019, a relative decrease of 2.19%, and continued to decline in the following three years. This means that 360 has been declining its revenue for four consecutive years. Now it seems that 360's revenue in 2023 will also continue to decline.

In addition, 360 began to record losses in 2022. According to the financial report, 360's net loss in 2022 was 2.204 billion yuan, the net profit in the same period of 2021 was 902 million yuan, and 2.913 billion yuan in 2020. In 2022, 360's net loss after deduction was 1.864 billion yuan, and its net profit after deduction was 608 million yuan in 2021 and 2.547 billion yuan in 2020.

Correspondingly, the expenses of 360 are relatively high. In the first half of 2023, the company's R&D expenses were 1.560 billion yuan, a decrease of 3.28% from the same period in 2022, accounting for 34.64% of revenue; Sales expenses were RMB944 million, a decrease of 2.97% compared to the same period in 2022.

In terms of business segments, 360's revenue was mainly contributed by Internet commercialization and value-added service business. In the first half of 2023, the revenue of this sector was about 2.681 billion yuan, a year-on-year decrease of 5.92%. Among them, the revenue of Internet advertising and service business was 2.168 billion yuan, a year-on-year decrease of 6.13%; The revenue of Internet value-added services represented by games was 513 million yuan, a year-on-year decrease of 5.01%.

In the first half of 2023, 360's security and other related revenue was 908 million yuan, a year-on-year decrease of 12.5%, of which the safety and other related revenue in the second quarter was 654 million yuan, a year-on-year increase of 98.76% and a month-on-month increase of 157.16%; The revenue of smart hardware business was 865 million yuan, down 5.19% year-on-year, mainly due to the decline in the needs of some large customers.

Public information shows that 360 was listed on the New York Stock Exchange in 2011 and then privatized in 2016. In 2018, 360 "backdoor" Jiangnan Jiajie (full name "Jiangnan Jiajie Elevator Co., Ltd.") was listed on the A-share market, effective from February 28, 2018.

On the first day of A-share listing, 360 opened at 65.67 yuan per share and closed at 56.92 yuan per share, with a market value of more than 380 billion yuan. As of the close of trading on August 31, 2023, 360's share price closed at 11.18 yuan per share, with a total market value of about 79.9 billion yuan.

Bedo Finance found that 360's stock price once rose to 20.85 yuan per share on April 4, 2023, becoming the company's highest value in the past 52 weeks (one year), corresponding to a market value of about 149 billion yuan. Based on the closing price on August 31, 360's share price fell by about 46.38%, and its market value decreased by about 69.1 billion yuan.

On April 21 this year, Zhou Hongyi, founder, chairman and general manager of 360, issued an internal letter of "360 Artificial Intelligence Mobilization", saying that the big language model is a new industrial revolution, and any APP, software, website and application is worth reshaping. The deep combination of GPT and hundreds of industries will directly change the competition pattern of the industry, and enterprises that cannot catch this bus will be eliminated.

Zhou Hongyi asked every employee, product and business of 360 to fully embrace artificial intelligence, adapt to human-machine collaboration, and start product reshaping. According to Bedo Finance, Beijing Qihoo Technology Co., Ltd. has applied for the registration of "360AI", "360 Brain", "CHAT360" and "360GPT" and other trademarks.

In particular, the first batch of domestic large-model products were approved for public service on August 31, 2023, including 3 in Shanghai and 5 in Beijing, including Baidu (Wenxin Yiyan), Douyin (lark model), Zhipu AI (GLM model), Chinese Academy of Sciences (Zidong Taichu model), Baichuan Intelligent (Baichuan model), SenseTime (Riri Xinda model), etc.

In contrast, 360 Brain and others have not yet been approved. According to the Measures for the Administration of Generative Artificial Intelligence Services (Draft for Comments), before enterprises use generative AI products to provide services to the public, they shall report a security assessment to the state internet information department, and perform the procedures for algorithm filing, modification, and cancellation in accordance with the Provisions on the Administration of Internet Information Service Algorithm Recommendations.

And now it seems that 360 Wisdom Brain is temporarily one step behind.